Navigant Research Blog

One of the hottest areas of urban innovation is mobility. Cities are grappling with ways to reduce congestion and vehicle emissions while enhancing the transport options for citizens. Infrastructure improvements are, of course, critical to this strategy in the form of new mass transit systems, the deployment of EV charging networks, or the creation of bicycle sharing schemes, for example.

However, a less expensive but critical piece of the puzzle is the delivery of better information so residents and visitors can make the right choices about their journey options and to enable the better management of the existing road and transport systems. As a consequence, a host of new players are entering the market to deliver services to both travelers and cities.

X-Ray Specs

Urban Engines is one of the most notable new players. Formed by a group of former Google employees, it developed its first advanced analytics solutions were aimed at city operators for improved management of transit systems. The company has now launched its first app for travelers, which provides transit options and map data across seven U.S. cities. In addition, an augmented reality overlay called X-ray mode maps transit information against a real-time image of current surroundings provided on a phone camera. Urban Engines not only uses spatial analytics to provide journey planning, but also wants to use behavioral economics to help cities incentivize citizens on the most efficient forms of travel.

Urban Engines does not have this market to itself, of course. CityMapper, for example, has been building its portfolio of city travel apps for a number of years and currently covers 12 cities in North America and Europe, plus Mexico City and Tokyo. It provides analysis of alternative options for user spanning walk routes, cycle routes, public transit, and taxis.

The Next Wave

Journey-planning applications are just one aspect of the changing landscape for transportation and travel data in cities. A new wave of start-ups is trying to expand the range of data that can be captured on city activities in order to provide new services and insights into movement across urban spaces. Some notable examples:

Veniam, founded in Porto, Portugal, provides networking technology that turns vehicles and infrastructure into Wi-Fi hotspots. By adding its networking technology to vehicles, it hopes to create a massive network that will generate a vast new range of data on the city as well as enhancing the communication capabilities for people and things.

Placemeter, a New York-based start-up, is paying people to use their old smartphones to monitor their neighborhood for people and traffic. This anonymized data can then be used to inform people or businesses about current conditions (for example, traffic levels or queues for restaurants), as well as for analysis about general trends in activity in the area.

TravelAI, a U.K. startup, has developed software to exploit crowd-sourced smartphone data to develop new levels of insight into travel patterns and mobility options for cities and citizens.

Of course, cities also have data from their existing traffic management systems, transit information systems, and bike-sharing schemes. And to this picture, we can add the recent announcement that Uber has agreed to share its journey data with cities, starting with Boston. These rich seams of data are increasingly available for cities and entrepreneurs to develop new services and new tools for urban mobility management. The data gold rush for urban mobility has just begun.

Granted, Uber and Lyft are not carsharing companies exactly. They are mainly alternatives to taxi or livery services. But they do share DNA with carsharing. These companies operate somewhat like peer-to-peer (P2P) carsharing services, such as Relay Rides, which also serve as a way for non-professional drivers and those in need of a car to connect, as well as to maximize the utility of someone’s underutilized car. And, P2P car services could compete with one-way carsharing, a business model that has taken off in the past few years thanks to companies like Autolib’, car2go, and DriveNow. These services are all part of the new collaborative economy, which depends on a radically new attitude toward car ownership and the ubiquity of smart devices, apps, and software that makes the collaboration as seamless as possible.

Changing Times

The dramatic growth of P2P car services is just one example of how dramatically the transportation landscape is changing, with a clear shift away from the privately owned car as a primary transportation mode. Yes, this change is still largely concentrated in major urban areas and in developed countries. Meanwhile, rising car markets (like China) continue to show increases in sales to first-time car buyers, even as the pace of auto sales growth has slowed somewhat. Still, in a world that is becoming increasingly urbanized, and with the rise of megacities (cities with populations of 10 million or more), this mobility transformation is going to spread. In the world’s large cities, automakers will find their businesses increasingly squeezed by a range of other transportation options, including the P2P car services and carsharing.

How much of a threat will these options be to car companies? Carsharing will cut into car sales to some degree, but based on Navigant Research’s forecasts, vehicle sales reductions directly related to carsharing will be tiny compared to the total passenger car market, which globally reached around 82 million in 2013. But the broader transformation of urban mobility will have an impact on auto sales, as the many options for personal mobility make it easy to forgo buying a car during the time that fuel costs will be rising, along with the indirect costs of driving such as parking and traffic congestion.

This helps explain automakers’ interest in offering carsharing, which has the potential to provide substantial revenue. BMW and Daimler in particular each came roaring into this market in the last 18 months, capturing significant market share in the European cities where they operate. Daimler reports having 600,000 members in its car2go service, while BMW reports 215,000 members in DriveNow. In the Navigant Research report Alternative Revenue Streams for Automakers, revenuefrom original equipment manufacturer (OEM)-owned carsharing services is forecast to be in the billions as overall demand for collaborative car ownership grows and more OEMs enter this market. Carsharing represents a prime opportunity for automakers to ensure they play a central role in the changing mobility landscape.